We all know VLOOKUP (or INDEX+MATCH) as an indispensable tool in our Excel toolbox. But what if you want the lookups to be a little gentler, nicer and relaxed?
Let’s say you want to lookup the amount $330.50 against a list of payments. There is no exact match, but if we look 50 cents in either direction, then we can find a match. Here is a demo of what I mean.
Unfortunately, you can’t convince VLOOKUP to act nice.
Hey VLOOKUP, I know you are awesome and all, but can you cut me some slack here?
VLOOKUP is tough, reliable and has a cold heart. Or is it?
In this post, let’s learn how to do lenient lookups.
Data for the problem
Let’s say you have a simple 2 column table like this. Our table is uninspiringly named data.
Lenient lookup – setting up the formula
Our input amount is in cell C3.
Let’s say when looking up for the amount, we want to follow this logic.
- If an exact match is found, return that
- Else, see if we can find anything with in 50 cents either side (you can change 50 to whatever you want)
- If nothing can be found, we want to return “Not found” or similar message
Formulas to use:
1: we can use good old INDEX+MATCH
2: we can use array based INDEX+MATCH
3: we can use IFERROR.
Let’s put everything together.
Our lenient lookup formula (array):
=IFERROR( INDEX(data[Client], IFERROR(MATCH($C$3,data[Amount],0), MATCH(1, (data[Amount]>($C$3-0.5))*(data[Amount]<($C$3+0.5)),0) ))
,"Not found")
How does it work?
Let’s go inside out.
MATCH($C$3,data[Amount],0): this formula simply looks for C3 in data[Amount] column and returns the position.
MATCH(1, (data[Amount]>($C$3-0.5))*(data[Amount]<($C$3+0.5)),0): This array formula checks for 1 (TRUE) by looking at data[Amount] between C3-0.5 and C3+0.5
The formula has two Boolean arrays multiplied and it returns a bunch of 1s & 0s.
MATCH then picks up the first such amount.
Inner IFERROR(MATCH(…), MATCH(…)): This acts like a fail-safe switch. If there is no exact match (first one), then lenient match (second one) will be used.
Outer IFERROR(): If no matches are found (exact or lenient) then “Not found” will be printed.
As this is an array formula, you need to press CTRL+Shift+Enter to get the result.
Related material – read these if you have questions about the formula techniques used above:
Other lenient / almost lookup problems
There are few more variations to this technique. Let’s review them.
Note: all of these are array formulas, so press CTRL+Shift+Enter.
Ignore decimal portion
We lookup just the whole number portion of the value to find match.
Formula: =INDEX(data[Client], MATCH(G7, INT(data[Amount]),0))
Notes on how it works:
- INT() turns data[Amount] column to whole numbers.
- We then lookup the amount (G7) and return the match
Amount is at least something, client name begins with S
Formula: =INDEX(data[Client], MATCH(1, (data[Amount]>=G8)*(LEFT(data[Client],1)=”S”),0))
- We use a different Boolean structure with >= and LEFT() formulas. The output will be a bunch of 1s & 0s.
- INDEX+MATCH for find the first such value (G8)
Closest Amount to input
This is interesting. We use MIN & ABS to find closest amount to input value (G10) and return the client’s name.
Formula: =INDEX(data[Client], MATCH(MIN(ABS(data[Amount]-G10)), ABS(data[Amount]-G10),0))
- ABS(data[Amount]-G10) gives a bunch of absolute (positive) values. The smallest of these will closest to G10.
- MIN() finds the smallest value
- MATCH looks up the minimum value from ABS(data[Amount]-G10)
- INDEX gives corresponding client’s name
Download lenient lookup example workbook
Click here to download the example workbook. The file contains sample data, several examples of these techniques and additional resources to learn. Give it a go.
More ways to lookup
Lookups are an essential part of any data analysis work you do in Excel. Pick up some nifty tricks from these links.
- Basics:
- Advanced:
Got a lookup tip to share?
Have some lookup stories to tell? I am listening. Please post them in comments.
15 Responses to “Modeling Interest During Construction (IDC) – Excel Project Finance”
Thanks again for a very helpful post.
I had a similar problem when trying to model a balance sheet and profit and loss projection. The problem was that interest expense (in P&L) was dependent on a cash shortfall (in BS) which had to be funded. The cash shortfall depended on how much interest was paid, so the mutual dependency made a circular reference.
I addressed it with a macro that calculated interest outside of the P&L, then pasted the calculated amount into the P&L as a value. The model was out of balance, but by repeating the pasting and calculating loop the imbalance reduced to zero. It was a bit messy, and had to be repeated every time a line changed - but it worked.
If I have to do it again I'll read this article again first and see if it can be done more elegantly.
Hi,
The use of a circular reference can be avoided in this case. Just make use of the geometric sum to calculate the interest required. I’ll walk through the example from the spreadsheet.
First calculate the cash needed each year without the interest expense. So you year 1 you need 55 Mn, year 2 105 Mn, and 190 Mn for year 3. The total amount to borrow for year 1 is then (50 Mn)/(1-interest_rate) = (50)/(1-0.1). For years 2 and subsequent the amount borrowed is the cash needed in that year plus the interest_rate times the amount already borrowed. For year 2 (105 + interest_rate * sum(previous debt raised))/(1-interest_rate)=(105+0.1*61.1)/(1-0.1).
This process avoids the need for a circular reference, and makes the calculation more stable.
Thanks,
Tristan
The question is for the year 1 in your case, the amount works out to 45 mn. However in the year 2 you have applied the loan amount as 61.1 mn.
Am I missing something ! Please help !
very helpful information!!!
using circular references and to make model more stable we can use combination of "IF" and "ISERROR" functions. i.e
=if(iserror(formula1),"",(formula1))
this formula will return blank value if there is any error otherwise give the result required.
I usually use this in my models and it makes them very stable......
🙂 🙂 🙂
@Terry: Thats right. Exactly same problem is seen in Interest - Cash cycle in P&L and Cash Flow statement as well. In our trainings on financial modeling in excel, we demonstrate using both the circular loops as well as the macros to take care of this problem. Circular loops have their own pitfalls. If the model enters into a state of error, the error percolates!
@Tristan: Thanks for pointing out. I agree with you that if circular loops can be avoided, they should be avoided.
@Yogesh: This is one way of avoiding the problem. Although circular loops have another problem that they make your sheet slower. Each time, there is a change in the sheet, all the calculations are redone. So if they can be avoided, they should be avoided.
Please note that this was an example (a large one indeed) and I didn't have space to speak about the pitfalls of this approach! I just wanted to illustrate an approach and am glad that some of you found it useful!
I think while posting, there is an error in the images! The last image should be flipped with the one that is posted in step VII!
I think you can try the following simple solution given by Microsoft itself to make the circular works:
Windows: Excel Options -> Formulas -> Put a tick on "Enable iterative calculation"
Mac: Excel -> Preference -> Calculation ->Put a tick on "Limit iteration"
You can change the maximum number of calculation iterations as well as the maximum changes which iteration stops for goal seeking or for resolving circular references based on the number you type in the maximum change box.
Thank you.
Hey All
I heard that we can take care of the circularity with the help of macro for IDC. Can anybody help on the steps to construct the macro for the same.
Regards
Vinay
Hi Vinay,
If you look closely, you are essentially copying the values from the interest calculation to the IDC in project cost.
Basically you can record a macro, that takes the values from interest and pastes special the values in IDC row in project cost.
Then you can run that recorded code in a for loop.
Hope this helps.
Thanks Param for reply.
But before calculating interest, i need to provide for Upfront Equity and Equity, which are essentially part of total project cost. Hence, i need to put in Upfront Equity and Equity to calculate the IDC which is again hitting the total project cost.
Bit of confused on how to remove this circular reference.
Regards
Vinay
Wow, this was a brilliantly simple post. I was looking online for a while before I found this page. Never seen this been explained so beautifully yet so crisply before. Thanks for saving my ass at work! (i'm relatively new to finance + modeling)
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I have been reading your blog since my college days. Today, I'm writing just to say thanks.
We have calculated Financial Rate of return of a hydropower projects, and the observer has raised an observation regarding Total Project cost with IDC Rs. 8616.01 million (PKR) and with-out IDC 8352.46 million (PKR). How does the Financial nalysis be calculated on the basis of with-out IDC Or With IDC?????
Please helpf. if possible to spare some time.